Select Committee on Science and Technology Second Report


CHAPTER 2: Definitions and measures

Introduction

2.1.  Energy efficiency is inherently a narrow term: technically, it refers to the proportion of energy within a fuel which is converted into a given output. However, when used as a policy term, as in the statement in the White Paper that it is "the cheapest and safest way of addressing all four [energy policy] objectives", it must have a broader meaning.[8] These objectives—the reduction of carbon emissions, the enhancement of the security of energy supplies, the improvement of the competitiveness of British businesses, and the reduction of fuel poverty—are diverse in nature. Can energy efficiency possibly deliver all these policy goals? Is too much weight being placed upon it, and is there a danger that policy-makers will lose sight of its essential meaning and limitations?

2.2.  These questions in turn raise concerns over how energy efficiency is to be measured, and hence how targets can be set. In the course of our inquiry it has become increasingly clear that both energy efficiency itself, and the motivation behind the current emphasis upon energy efficiency, are poorly understood. Our aim therefore in this first chapter is to analyse what energy efficiency is, how it can be measured, and what it can be expected to achieve.

Background

2.3.  The Government's appeal to "energy efficiency" as the means to achieve four distinct energy policy objectives is simply the latest proof that the term can mean different things at different times and in different places or circumstances. In the words of Professor Tadj Oreszczyn and Professor Robert Lowe, "The last 30 years of energy efficiency in buildings in the UK have seen a range of different policy instruments … motivated by a desire to improve security of supply, improve health and comfort, save money and energy and most recently, reduce carbon emissions." (p 70)

2.4.  The Association for the Conservation of Energy (ACE) echoed this point, noting that in 1982-83 the House of Lords Select Committee on the European Communities (now the European Union Committee) justified what was then called the rational use of energy for "purely competitive, economic and strategic" reasons.[9] This report, prepared with the memory of the oil price shocks of the 1970s still fresh in people's minds, makes no mention of the environment. In marked contrast, by the early 1990s the same Committee had concluded that "there is now an environmental imperative to save energy".[10] (p 57)

2.5.  In the last decade more evidence has emerged on the rate of climate change,[11] which has become, in the words of the Prime Minister in September 2004, "the world's greatest environmental challenge", a phenomenon "so far-reaching in its impact and irreversible in its destructive power, that it alters radically human existence". However, despite this reinforcement of the environmental rationale for energy efficiency, the Government continue to insist that energy efficiency must be made to serve all four energy policy objectives without giving explicit primacy to any one of them.

2.6.  Just as the four objectives of Government energy policy differ in nature, so the way in which the contribution of energy efficiency to their achievement is measured necessarily differs in each case. As a general rule, what cannot be measured cannot be managed, so if something is measured in several different ways management becomes, to say the least, problematic. There is no doubt that energy efficiency potentially impacts on a wide range of policy objectives. However, the Government's approach, presenting energy efficiency as all things to all men, risks creating confusion. The written evidence presented by the Government was opaque and unstructured, with a series of numbered annexes (some previously published); in oral evidence we found it equally difficult to get at a clear sense of the fundamental policy, while our discussions with other witnesses have revealed a multiplicity of incentives, instruments and agencies active in the field—in short, muddle.

2.7.  Energy efficiency has been drafted into the service of a wide range of policy objectives since the 1970s, but the way it has been understood and measured has been elusive and variable. We have been dismayed in the course of our inquiry by the inconsistency and muddle of much current thinking about energy efficiency.

2.8.  This muddle is not the sole responsibility of Government, but only Government can resolve it. However, the current attempt to present energy efficiency as "the most cost-effective way to meet all [four] energy policy goals" only adds to the confusion. At the very least, careful oversight will be needed to ensure that the targets set for energy efficiency are defined, that conflict between them is avoided, and that progress is measured. We urge the Government to bring greater clarity and intellectual rigour to its presentation of energy efficiency.

Measuring energy efficiency

2.9.  As we have already noted, energy efficiency is strictly speaking a narrow technical term. For this reason various proxy measurements are used in assessing its contribution to energy policy. Broadly such measures fall into three categories:

2.10.  None of these measures is ideal, since each incorporates a number of variables which obscure the impact of energy efficiency per se. Energy intensity, for instance, which, as the Government note, is "traditionally … used as a proxy for energy efficiency" (p 4), may be affected by wider structural changes—in the case of the United Kingdom in recent decades, the decline of carbon-intensive industries such as steel and coal, and the move towards a service economy. On the other hand, although energy efficiency is conventionally regarded as the rate at which delivered energy is converted into useful outputs, concentration on delivered energy alone would risk overlooking the effects of economic or demographic changes, not to mention the impact of fuel switching (e.g. from coal to gas in electricity generation), which has a profound impact upon primary energy demand and greenhouse gas emissions. In the words of the Royal Academy of Engineering, "of all energy measures, [delivered energy] is the most misleading" (p 2).

2.11.  So what is the Government's preferred measure? We have already noted that the Government see energy efficiency as a means of delivering all four White Paper objectives—unfortunately the inconsistencies between these objectives mean that the Government seem unable to agree upon a single measure. The Executive Summary to the Action Plan, for example, notes that "energy efficiency has been improving steadily over recent years". It then asserts that "across the economy as a whole … we could reduce energy use by around 30 percent". The next sentence continues, "The White Paper identified potential savings of around 10 million tonnes of carbon by 2010, and a similar quantity by 2020". Efficiency, energy demand, carbon—the relationships between them are wholly unclear.

2.12.  In contrast, Ofgem brought a welcome note of clarity to the issue of measurement with regard to specific policy objectives: "It is … important for the programmes to be measured in the units of their objective: that is if the programme is being designed to reduce carbon emissions the activity being promoted should be measured in units of carbon abated and similarly if the programme is intended to reduce the numbers of those in fuel poverty then the success of the programme should be measured by the numbers taken out of fuel poverty. Neither the Warm Front programme or the EEC[12] are measured in such a way". We agree. (p 307)

2.13.  The evidence presented by the Government to this inquiry did not get us much further in identifying a preferred measure of energy efficiency, though it did establish the Government's wish to bring out what Mr Jeremy Eppel, of Defra, called "the totality of systemic energy policy". Within this totality, he told us, the Government's new emphasis on energy efficiency marked a new focus on "final energy use more than primary energy use". (QQ 3-4)

2.14.  It may be helpful therefore to break down the "totality of systemic energy policy" into stages. This reveals inefficiencies at every stage of the process of converting primary fuel sources into useful outputs:

  • Acquisition of fuel: the extraction, refining and transportation of bulky fuels, such as fossil fuels and biomass, itself consumes a substantial amount of energy.
  • Generating inefficiency: there are limits on the levels of efficiency that can be achieved in converting primary fuels into delivered energy—these are particularly marked in the case of electricity generation. The most efficient devices for generating electrical energy from fossil fuel, Combined Cycle Gas Turbines, currently operate at efficiencies of 45-50 percent; over 50 percent is possible, but that takes one close to the thermodynamic limit, which represents an absolute constraint. Efficiencies in exploiting heat, on the other hand, are not subject to the same thermodynamic limit, and are therefore much higher, reaching 90 percent or more. By using some of the low-grade heat rejected from electricity generation combined heat and power (CHP) plants can achieve 80 percent or more total conversion efficiency.
  • Distribution: all transmission and distribution systems lose energy. Within the United Kingdom it is estimated that 1.5 percent of electricity is lost via the transmission network, and a further 6 percent between grid supply points and customers' meters—a total of 7.5 percent, or some 30 TWh/year.
  • Technical inefficiency: this covers all sorts of technical energy loss, from inefficiency in buildings (such as poor insulation), through boiler inefficiency or the overpowering of motors in domestic and commercial appliances such as refrigerators, to efficiency of industrial processes.
  • Behavioural inefficiency: even with efficient appliances or buildings, consumers still use them inefficiently. They may waste energy by leaving lights on, electrical appliances in standby mode, or doors or windows open. They may also find new and extravagant ways to use energy, such as patio heaters, in order to enhance their quality of life.

The first three bullet points are concerned with the delivery of energy (in either its primary form, such as gas, or converted into electricity) to end users. "Energy efficiency" is conventionally regarded as being concerned with the last two, and these will be the focus of this report.

2.15.  However, as Tom Delay, Chief Executive of the Carbon Trust, told us, greenhouse gas emissions link all the stages—carbon, he argued, was the "only common currency" allowing one to assess the totality of energy policy, and the role of energy efficiency within it (QQ 71-72). Energy efficiency is a means to an end, and any measure must therefore be composite—that is to say, it must focus on the potential for a reduction in demand for delivered energy, which will in turn be related to the achievement of a specific policy goal. Of all the Government's long-term goals for energy policy, tackling climate change has been identified as the "greatest challenge"; given that carbon is also the only common currency linking all stages of energy production and use, we believe that carbon should be the ultimate measure of energy efficiency.

2.16.  This is the approach we have adopted in this Report. To avoid confusion between "energy supply" and "energy efficiency", we have focused on delivered energy, and have not assumed a major shift in energy supply towards low-carbon sources such as renewables or nuclear power. However, we have considered possible changes from one form of delivered energy to another. As background, we have also investigated how the carbon intensity of delivered electrical energy has changed since 1990 (see below,
paragraphs 2.41 ff).

2.17.  In September 2004 the Prime Minister identified climate change as "the world's greatest environmental challenge". We agree, and believe that the fundamental objective of policies in favour of energy efficiency at the present time must be the absolute reduction of carbon emissions. This objective must be reflected in the setting of targets for and the measurement of energy efficiency. While the targets in the White Paper have been expressed in terms of reductions in carbon equivalent emissions, the confusion of measures that is found elsewhere in Government policy statements undermines their credibility. We recommend that the Government henceforth adopt a more rigorous approach to the measurement of energy efficiency in terms of carbon.

Establishing a baseline

2.18.  Measuring energy efficiency in terms of carbon will only make sense if there is a clear methodology for assessing the carbon impacts of changes in energy demand, and if the baseline for assessing carbon emissions is transparent and consistent. Unfortunately, the presentation of the Government's targets for reducing carbon emissions is profoundly confusing.

2.19.  In outline, the Kyoto Protocol, which came into force in February 2005, commits the United Kingdom to reducing greenhouse gas emissions by 12.5 percent below 1990 levels by 2008-12.[13] This reduction had already been achieved by the turn of the century, and although emissions of carbon dioxide have since crept back up the United Kingdom remains on target to meet its Kyoto obligations through reductions in emissions of other greenhouse gases. In addition, the Government have adopted a national target to cut carbon dioxide emissions by 20 percent below 1990 levels by 2010 (that is, from 165.1 MtC to 132.1 MtC). They have also accepted the recommendation of the Royal Commission on Environmental Pollution (RCEP) that the United Kingdom seek to cut carbon dioxide emissions by 60 percent by 2050.[14] These various figures and targets are summarised in Table 1.

TABLE 1

United Kingdom greenhouse gas and carbon dioxide emissions and targets
Total GHG emissions
CO2 emissions
UK Kyoto baseline
209.7 MtC
165.1 MtC
UK 2003 emissions
181.7 MtC
156.1 MtC
Kyoto target (average for 2008-2012)
183.5 MtC
-
Domestic target for 2010
-
132.1 MtC
RCEP target for 2050
-
66.0 MtC

2.20.  However, when it comes to monitoring these commitments and setting specific interim targets confusion begins to set in. The cuts in emissions described in the White Paper and the Action Plan, for example, are set not against actual 1990 levels, or even the composite Kyoto baseline, but against "baseline projections" for carbon emissions which in turn derive from the 2000 Climate Change Programme. These baseline projections, which took into account the effect of structural changes in the 1990s, as well as policies that had been introduced since Kyoto, were for CO2 emissions of 153.8 MtC by 2010, and total greenhouse gas emissions of 180.2 MtC.[15]

2.21.  The 2000 Climate Change Programme also proposed a range of new measures, which have been implemented over the past five years. It stated that these new measures would deliver, compared to the baseline projections, an additional 17.75 MtC reduction in emissions by 2010, of which 10 MtC were ascribed to energy efficiency.[16] Such reductions were to deliver, compared with 1990, a 19 percent reduction in carbon dioxide emissions (to 136 MtC), and a 23 percent overall reduction in greenhouse gas emissions (to 163 MtC).

2.22.  Adding to the confusion, whereas the Climate Change Programme, under the heading "Bringing it all together", gives projections for 2010, the White Paper, published three years later, sets its own vaguer but more ambitious goals for 2020. It asserts that with the measures in the Climate Change Programme the United Kingdom's CO2 emissions might amount to 135 MtC in 2020, and then sets out the aim of reducing emissions by a further 15-25 MtC below that level (in other words, to 110-120 MtC). Of these further reductions, some 10 MtC are projected to be from energy efficiency (and are thus in addition to the 10 MtC savings from energy efficiency already expected to emerge from the Climate Change Programme by 2010).[17]

2.23.  However, in the Action Plan, published a year later, the focus returns to 2010. The projections change yet again—rather than the 10 MtC set out in the Climate Change Programme, the Action Plan projects savings from energy efficiency of 12.1 MtC by 2010. However, the Action Plan makes no projections for 2020. The divergence from the White Paper is explained by the fact that its projections "were not intended to be rigid targets but illustrated the scale of carbon savings which could be achieved".[18]

2.24.  The White Paper and the Action Plan do not seek to update the 2000 Climate Change Programme projections across the board. However, in December 2004 the Government published its Review of the UK Climate Change Programme consultation paper. This reveals that whereas the 23 percent cut in greenhouse gas emissions by 2010 described in the original Climate Change Programme would have meant total emissions of around 163 MtC, the latest projection is that they will stand at 165.4 MtC. Instead of the projected 19 percent cut in CO2 emissions by 2010, to 136 MtC, the latest projection is that they will stand at 142 MtC, a drop of just 13.8 percent from 1990 levels.[19] It is notable that the Review also suggests that by 2020 CO2 emissions are likely to stand at just under 144 MtC, compared with the 110-120 MtC described in the White Paper.

2.25.  The picture is thus extremely muddled. Figures 1 and 2 give actual data from 1990-2003 for greenhouse gas and CO2 emissions respectively, combined with the projections for 2000-2020 given in the Climate Change Programme and the 2004 Review. They also illustrate how these projections compare with the United Kingdom's Kyoto obligation to reduce greenhouse gas emissions, and the two domestic CO2 targets—the Government's national target for 2010, and the more speculative goal for 2020 contained in the White Paper.

FIGURE 1

Greenhouse gas emissions since 1990, projected to 2020


FIGURE 2

Carbon dioxide emissions since 1990, projected to 2020



2.26.  The graphs demonstrate the difficulty in knowing what credence to give to the targets described in the White Paper and the Action Plan, given that they are not savings against a real baseline, but against changing projections, which are in turn based in turn on a variety of assumptions regarding economic growth, energy prices, the impacts of policies, and so on. This may appear to be an academic issue. However, two examples will suffice to show that changes in baseline projections can have a serious impact on present policies. The first example is the change in the target for energy efficiency announced in the Action Plan, which, while increasing the 2010 energy efficiency target from the 10 MtC described in the White Paper to 12.1 MtC, announced a reduction in the share of this total ascribed to domestic energy use from 5 to 4.2 MtC. This was described by the Association for the Conservation of Energy as "an extraordinary reversal of Government policy", which had caused a "crisis of confidence" (p 56). Mr Nick Eyre, of the Energy Saving Trust, which is sponsored by Defra, admitted that "we were never quite clear" why the target had been changed—but he thought it might be the result of "technical issues around what the base line is" (Q 287).

2.27.  Another potentially more serious example concerns the National Allocation Plan (NAP) for the EU Emissions Trading Scheme. We discuss this in more detail in Chapter 10. At this point we note only that the United Kingdom last year sought an increase in the level of emissions allowed for British businesses under the Scheme, on the basis that the revised projections for "business as usual" emissions indicated that the baseline would in fact be higher than expected. The Commission has refused to allow the increase, and as a result, while the Government have agreed to make allocations to individual sectors according to the original NAP, they are apparently considering legal proceedings against the Commission.

2.28.  Against this background, it is not surprising that our witnesses from Defra, pressed on the nature of the proposed energy efficiency savings, quickly found themselves in difficulty:

"They are real relative savings. They are measured against the baseline that was projected … in the … Climate Change Programme for 2010, so relative to that baseline, which is the standard baseline that we use for various policies related to carbon emissions, they are genuine reductions on what would otherwise have happened had these policies not been put in place." (Q 18)

2.29.  We cannot follow this argument. If savings are real, they cannot be relative—it is meaningless to talk of savings against what might have happened had certain policies not been in place. For example, the Government have now conceded that their Climate Change Programme targets for 2010 are unlikely in fact to be met. Against this background, what is now the status of the 10 (or 12.1) MtC savings assigned to energy efficiency? Admittedly the calculation of greenhouse gas emissions, and the attempt to quantify savings, in light of variables such as rates of economic or population growth, structural change, and so on, is far from straightforward. Nevertheless, the Government's approach, with its proliferation of projections and targets, has created confusion and uncertainty, which risks compromising the practical delivery of carbon savings.

2.30.  Levels of carbon emissions should be grounded in clear historical data, not hypothetical projections. Insofar as projections are necessary, the methodology on which they are based should be explicit, transparent and consistent. None of these requirements is being met at present. The "baseline" for the White Paper targets, which is derived from the projections contained in the 2001 Climate Change Programme (which itself took into account the impact of policies introduced by the Government after the signing of the Kyoto Protocol in 1990) is obscure. We recommend that the Government ground its targets more firmly in reality, making it clear how they are derived and expressing them in absolute year-on-year carbon equivalent emissions.

Energy efficiency and carbon: the scope for savings

2.31.  Figure 3 shows changes in United Kingdom energy demand by sector from 1970-2003 (included in the graph as the last year for which final data are available), derived from the Digest of UK Energy Statistics (DUKES), and combines these figures with the DTI's projections for future energy demand. These projections take account of policy measures already in place, including, for instance, EU Emissions Trading. However, they become, as the DTI acknowledge, increasingly uncertain as one moves towards 2020.

2.32.  The historical data illustrate the fundamental change of the last 35 years: a huge decline in industrial energy use (from 62.3 Mtoe in 1970 to 35.1 Mtoe in 2003), counterbalanced by an equally dramatic rise in the use of energy for transport (from 28.2 Mtoe in 1970 to 56 Mtoe in 2003). In contrast, energy consumed in services (a catch-all, including commercial and public sectors and agriculture) has remained flat, while energy consumed in the residential sector has crept slowly, but consistently upwards (from 36.9 Mtoe in 1970 to 47.9 Mtoe in 2003).

FIGURE 3


Source: Energy Sector Indicators (1970-2003), DTI Emissions Projection (2005-2020). An estimate of net energy consumption by the iron and steel industries has been added to the DTI's projections.

2.33.  The projections reveal not only where the Government see scope for future savings by means of energy efficiency, but the extent to which such expectations mark a departure from or a continuation of existing trends. They show, for instance, that while domestic energy consumption has, allowing for variations in individual years, shown a consistent upward trend for 35 years, the Government, despite their major programme of house-building, which is expected to result in almost two million new houses being built by 2015, expect the trend to be partially reversed before energy consumption stabilises at a slightly lower level than in 2003.

2.34.  On the other hand, industrial energy consumption experienced a long decline, before levelling off in the late 1990s. The Government now expect it to remain at a similar level before increasing somewhat after 2010—again reversing a 35-year trend. Yet the Action Plan envisages that a further 3.8 MtC "saving" can be delivered by energy intensive industries by 2010—illustrating just how hypothetical many of the projected "savings" in fact are.

2.35.  Finally, the graph shows that consumption of energy for transport—which, as we have already noted, falls outside the scope of this report—is expected to carry on rising inexorably, to such an extent that total energy consumption in 2020 is projected to be around 13 percent above 2003 levels. In the absence of serious action to tackle the growth in both road and air travel, there must be a risk that energy efficiency gains in other sectors will be wasted.

2.36.  The graph thus provides a snapshot of the scale of the challenge—more detail on the targets and policies affecting particular sectors is given in the relevant chapters below. However, it is when one tries to translate the data on energy use into carbon, which we have already proposed as the principal objective for energy efficiency, that the problems really start.

2.37.  The fundamental difficulty is that while changes in energy efficiency affect the consumption of delivered energy, Government data on greenhouse gas emissions are derived from the UK Greenhouse Gas Inventory, the annual report prepared under the United Nations Framework Convention on Climate Change. Within the inventory, which follows IPCC guidelines, emissions are assigned to designated source categories, with the result that some 85 percent of emissions (including, for example, those derived from the combustion of fuel for transport, or domestic heating, as well as those from electricity generation) are lumped together under the general heading of "energy". Other sources of emissions, such as those from landfill sites, are unrelated to energy consumption at all. As a result there is no direct read-across from the data on greenhouse gas emissions to energy efficiency and end use.

2.38.  Figure 4, which presents in bar chart form the data contained in Table 3 of the Climate Change Programme Review, illustrates the problem. In an attempt to show the sources of emissions more usefully than in the Inventory, the Government have broken "energy" down into smaller categories, for instance treating combustion of fuel (petrol, natural gas, and so on) for transport or residential uses as distinct "sources" of greenhouse gas emissions, and creating a new category of "energy supply", which is presumably largely made up of electricity generation. However, the methodology underlying the Government's approach is frustratingly obscure, and leads to serious anomalies. For instance, while the combustion of gas for domestic central heating is treated as a distinct "source" of greenhouse gas emissions, domestic electrical heating appears to fall under the heading "energy supply". As a result of these anomalies, Figure 4 has limited value for our present purposes.

FIGURE 4

Greenhouse gas emissions by source, 1990 - 2020


Source: Climate Change Programme Review.

2.39.  Figure 5 illustrates in similar form the data contained in Table 4 of the Climate Change Programme Review. In this the Government have assigned emissions, including those deriving from energy supply, to end users, and the result should therefore in principle be more informative. Unfortunately, it is impossible to read across from these data to the raw figures contained in DUKES. The categories overlap in ways that are not explained—for instance, whereas DUKES draws together industrial energy use under a single heading, in Figure 5 industrial emissions appear to be split up, in ways that are not explained, between "business", "industrial processes", and possibly other categories. Furthermore, the presentation of non-energy related sources of emissions, such as landfill sites or particular processes such as the de-carbonation of limestone in cement manufacture, as "end users", is intrinsically artificial and confusing. Thus Figure 5 too is of limited value in assessing the impact of changes in consumption of delivered energy upon carbon emissions.

FIGURE 5

Greenhouse gas emissions by end-user, 1990 - 2020


Source: Climate Change Programme Review.

2.40.  In an attempt to pin down the relationship between energy efficiency and carbon rather more closely, we have commissioned research from Dr Phil Sinclair, of the University of Surrey, into household energy consumption and related carbon emissions.[20] Dr Sinclair's methodology is summarised in Box 1. He has used figures for energy consumption that are publicly available in DUKES, and has converted them from thousand tonnes of oil equivalent (ktoe) into a simple measure of gross energy, expressed in primary energy unit of joules.[21] His analysis shows that from 1990 to 2002 total United Kingdom household consumption of delivered energy rose by some 17 percent. This total includes fuels used for heating as well as electricity.

2.41.  The second part of Dr Sinclair's work is an analysis of the carbon intensity of the fuel mix, taking a "life cycle" approach—in other words, including such factors as system losses, losses in fuel extraction, conversion efficiencies, and so on. Multiplied by the figure for total energy consumption, this produces an overall figure for carbon emissions resulting from household energy use, which, by Dr Sinclair's calculation, have fallen over the same period by just over half of one percent.[22] Significantly, while the results of Dr Sinclair's analysis correspond to within a few percentage points with the Government figures, so as to indicate broad consistency between the two independent calculations, there are enough differences to demonstrate the difficulty of establishing a clear link between the Government's existing data on emissions and those on delivered energy consumption.

BOX 1

Calculating the effect of energy use upon emissions
  • Energy efficiency primarily affects the consumption of delivered energy, for which annual data are found in the Digest of United Kingdom Energy Statistics (DUKES).

  • Data from DUKES for total energy consumption in a given year are converted into a neutral measure of gross energy (joules).
  • DUKES also provides data on the contribution of different primary fuels (such as coal, gas or oil) and of electricity to the total.
  • The carbon intensity of the total fuel mix in that year is then calculated, on the basis of a "life cycle" approach—taking into account fuel extraction, conversion efficiencies of electricity generators, and so on.
  • Consumption of delivered energy is multiplied by the figure for carbon intensity to produce a figure for the greenhouse gas emissions deriving from the consumption of delivered energy in that year.
  • Greenhouse gas emissions as a result of non-energy based activities (e.g. certain industrial process, the decay of waste in landfill sites, or changes in land use) are excluded. As a result this methodology provides an accurate picture of the impact of changes in consumption of delivered energy upon emissions.

2.42.  Dr Sinclair's calculations cover only the domestic sector, and may require refinement. However, as an attempt to establish a methodology for converting energy use into the common currency of carbon, we believe that it introduces greater clarity into the discussion of energy efficiency, by setting out an explicit methodology for translating data on energy consumption into carbon emissions. Only if the Government adopt a similar methodology will it be possible to demonstrate that their policies on energy efficiency are grounded in reality and are delivering tangible results. We believe this to be an essential pre-requisite for public information programmes to promote energy efficiency.

2.43.  In order to be able to measure the contribution of energy efficiency to emissions targets, the Government should develop and publicise an explicit and transparent methodology for calculating the relationship between use of delivered energy and greenhouse gas emissions. We have commissioned research which provides one such methodology, which we believe provides the basis for developing a reliable tool for measuring the contribution of energy efficiency to reductions in greenhouse gas emissions. We draw it to the attention of Government.

The fuel mix

2.44.  We have already noted that energy efficiency is just part of the story so far as overall energy use and its carbon impacts are concerned. Our approach to measurement embraces two components: a figure for the gross amount of energy actually used by consumers, and a "multiplier", which reflects the carbon intensity of the total fuel mix at any given time. Improvements in energy efficiency principally affect the first of these components, delivered energy, and this is accordingly the main focus of our report. However, the impact upon carbon equivalent emissions remains the ultimate measure of energy efficiency.

2.45.  If follows that any gains in energy efficiency could be either nullified or enhanced, as the case may be, by changes in the carbon intensity of the fuel mix. This could be as a result of fuel switching—for instance, from coal to gas, or from fossil fuels to renewables or nuclear power—or through changes in the efficiency with which existing fuels are converted into useful power or heat.

2.46.  The impact of such changes in the fuel mix was vividly demonstrated by the announcement on 21 March of the final figures for United Kingdom emissions in 2003. These revealed an increase in overall greenhouse gas emissions, particularly CO2, largely as a result of increased use of coal for electricity generation, which more than offset improvements in energy efficiency across the economy as a whole.[23] In fact United Kingdom CO2 emissions in 2003 were just 5.6 percent below the 1990 level, compared with a national target for a 20 percent reduction by 2010.

2.47.  The then Defra Minister, Lord Whitty, described this rise in carbon emissions as a "blip", and "not a long-run tendency", noting that the rise in emissions was caused by a "change in electricity sourcing" rather than a long-term rise in energy consumption (Q 716). Insofar as this is true, the increased use of coal is simply a partial reversal of the "dash for gas" in the 1990s, in itself a one-off event which saw the contribution of coal and oil to the electricity generation fuel mix fall from around three quarters to around a third—and which, indeed, played a major part in the United Kingdom's success in reducing greenhouse gas emissions to below the levels set by the Kyoto Protocol.[24] The Minister's argument thus cuts both ways.

2.48.  We have not addressed issues such as the efficiency of large-scale power generation, though we have touched on the role that more efficient combined heat and power plants might play in achieving the Government's objectives. Nor have we addressed issues such as the extraction and transportation of primary fuel, or the losses from transmission and distribution systems. Looking forward, nuclear power is currently scheduled to be phased out by around 2025, despite media speculation over its future. There remain doubts over the likely contribution that renewable energy sources will make to electricity generation, and over the extent to which carbon sequestration will be implemented to reduce emissions from fossil-based electricity generation. Major technological innovations that would offer large-scale, cheap, environmentally benign electricity (such as nuclear fusion) remain in all probability some decades ahead, even on the most optimistic predictions. Therefore efforts to reduce emissions cannot be relaxed, and the risk remains that changes in the carbon intensity of the fuel mix will undermine any improvements that can be achieved by means of end use energy efficiency.

2.49.  We welcome that fact that the United Kingdom remains on track to meet its Kyoto obligations. However, as the emissions data for 2003 show, there is no cause for complacency or self-congratulation—the Government have themselves conceded that the domestic targets contained in the Energy White Paper are unlikely now to be met. In fact the United Kingdom had already met its Kyoto obligations before the end of the 1990s, largely for structural reasons and because of changes in the fuel mix, whereas since 1999 carbon dioxide emissions have risen.

2.50.  Energy efficiency could contribute significantly to future reductions in emissions, and in the remainder of this report we analyse ways in which this contribution can be maximised. However, we believe that in the long term there is no prospect of the Government's climate change objectives being met unless there are also innovations in generating technology, fundamentally changing the carbon intensity of the primary fuel mix. We urge the Government to face up to this issue.


8   The words quoted are from paragraph 1.19. Back

9   House of Lords Select Committee on the European Communities, The Rational Use of Energy in Industry, 8th Report, Session 1982-83 (HL Paper 83), pp viii-ix. Back

10   House of Lords Select Committee on the European Communities, Energy and the Environment, 13th Report, Session 1990-91 (HL Paper 62-I), p 23. Back

11   This evidence is drawn together in the Third Assessment Report by the Intergovernmental Panel on Climate Change, published in 2001 (http://www.ipcc.ch). For the Prime Minister's speech see http://www.number10.gov.uk/output/page6333.asp. Back

12   The Warm Front programme is dedicated to improving housing standards and reducing fuel poverty; the Energy Efficiency Commitment (EEC) is a commitment taken on by energy suppliers to install energy efficiency measures in domestic properties with a view to reducing carbon emissions. Back

13   The base year figure (which in fact incorporates 1990 emissions of CO2, CH4 and N2O, and 1995 emissions of HFCs, PFCs and SF6) is currently calculated to be 209.7 MtC. The United Kingdom is obliged to cut this to 183.5 MtC, averaged over the five years of the commitment period. Back

14   A cut of 60 percent, if replicated by other developed countries, would allow stabilisation of carbon dioxide concentrations in the atmosphere at no more than 550 parts per million, the target adopted by the RCEP. Back

15   Climate Change: The UK Programme, November 2000 (Cm 4913), p 53. Back

16   Ibid., p 125. Back

17   See White Paper, pp 26, 32-33. Back

18   Action Plan, p 10. Back

19   Review of the UK Climate Change Programme, p 23. Another layer of confusion is added by the fact that the "baseline" figure for 1990, which in 2000 was set at 211.7 MtC, is now set at 209.7 MtC. Back

20   Dr Sinclair's paper is printed in Appendix 4. Back

21   1 kWh = 3,600,000 joules, or 3.6 MJ. Back

22   The Government state on p 63 of the Review of the UK Climate Change Programme that household CO2 emissions have fallen by around 3 percent since 1990; see also the graphs and tables of CO2 and greenhouse gas emissions (pp 21-27).  Back

23   See the Statistical Release by Defra, 21 March 2005: www.defra.gov.uk/news/2005/050321a.htm.  Back

24   See Dr Sinclair's paper, Table 4, which reveals a fall in the carbon intensity of the electricity generating mix of around 25 percent from 1990-1995, corresponding to an absolute drop in emissions of almost 20 MtC, some two thirds of the absolute total fall in emissions since 1990.  Back


 
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